tv Nightly Business Report PBS December 11, 2012 1:00am-1:30am PST
nbr! >> susie: president obama was in michigan today, campaigning on his plan to avert the fiscal cliff. speaking to union workers at the daimler detroit diesel engine plant, the president said he is willing to compromise "a little bit" with republicans on getting a plan for economic growth, job creation, and reducing the deficit. but he said he would not compromise on raising tax rates for high-income earners. >> and that's a principle i won't compromise on because i'm not going to have a situation where the wealthiest among us, including folks like me, get to keep all our tax breaks, and then we're asking students to pay higher student loans, or suddenly, a school doesn't have school books because the school district couldn't afford it. >> susie: meanwhile, a ranking democrat on the house budget committee tells "nightly business report" he is optimistic about getting a
fiscal cliff deal by the end of they year. maryland congressman chris van hollen talked with our darren gersh, and began with an update on the status of the talks. >> well, the good news is that the president and the speaker of the house are now in face-to-face discussions. it's always better to be talking than not. the other development is that increasingly congressional republicans recognize that the position that they had staked out is unsustainable. >> one of the arguments we hear from some democrats is that the fiscal cliff isn't really a cliff, it's more like a slope and you could gradually go down it and the withholding from tax wouldn't kick in for a while and the spending cuts wouldn't hurt the economy for a while. do you think it is good idea to go over the deliver and it is more of a slope. >> no, i think would be a mistake to go over the fiscal cliff because it could set in motion lots of things that could be a drag on the economy. that being said, i think if it's clear that the parties were working toward a
negotiation, that you could spill into january without doing any irreversible damage. >> one of the ideas that seems to now be on the table is this idea of moving to a more accurate measure of inflation and using that to adjust social security benefits and tax brackets. is that something you could support in. >> well, i have two concerns with that. one is the general issue about dealing with social security in the context of these deficit reduction talks. because social security is fully solvent until the year 2033. after that point it would pay 75 cents on the dollar. if you do nothing. so we should work to deal with the long-term full solvency issue of social security. and the sooner we do that, the better. but it should be dealt with on its own terms. >> second, the chain cpi has a very negative impact on seniors, especially as they get older and older, because of its compounding effect.
and the third issue is a lot of economist s look at the cost-of-living of seniors. and they say it's actually higher. >> one of the ideas that is on the table is taking a look at medigap insurance. i think a lot of seniors will be sur-- surprised by that and the argument is medi gap covers their first dollar out of pocket. and i think some seniors will be wondering is why does my medigap policy, why could that potentially be part of this discussion on the fiscal cliff. dow want to explain that. >> sure, and that, in fact, is part of the president's budget now. a lot of people haven't looked a the what is in the president's budget. but that is an important idea. and the idea is this. right now the medicare system is essentially subsidizing a lot of the medigap plans, especially medigap plans that have total network coverage. in other words, where all of your copays are automatically covered. it's sort of take its away some of the purpose of copays which is to, you know, for people to can themselves
twice before they get another test or go to the doctor again. and so that has an impact of driving up medicare cost. and so one way to deal with that is through some very careful, very careful medicare reform as the president lays out in his plan. >> congressman, van hollen, thank you very much for your time. >> thank you. >> tom: as fiscal cliff negotiations continued in washington today, stocks on wall street were stuck in neutral. the dow rose 15 points, the nasdaq gained nine, and s&p added a fraction. still, the benchmark s&p 500 index has regained most of the ground it lost after the presidential election. that's as investors may sense an agreement to avert the fiscal cliff is coming soon. suzanne pratt reports. >> reporter: the tree is up on wall and broad, and so is the u.s. stock market. the holiday season typically is a good time for stocks. in fact, since 1950, december has been the best month of the
year for the s&p 500 with the index gaining an average of 1.7%. this december is off to a good start, even though the fiscal cliff looms large over trading floors. most investors remain optimistic there will be a deal in washington before santa arrives. but floor broker teddy weisberg isn't sure where all the optimism is coming from. >> it's a real dilemma here because a lot of folks that i talk to, and customers and professionals alike, are very, very nervous. and i think they are perplexed by the lack of weakness in the market, if you will. >> reporter: economists say no deal between lawmakers and the white house by new year's could push the u.s. into recession by early next year. that dire prediction should be bad news for stocks, but investors remain unfazed. experts say stocks are more likely to move in a tight trading range in the next few
weeks. >> if it does get toward the end of the year and it's a problem, maybe we'll see some sellers come out. but, so far, people just don't see it as a problem, and the type of market action that we've seen over the last couple of weeks is typical of what we see at the beginning of sustainable rallies. >> reporter: speaking of rallies, the s&p 500 is up about 12% this year. if that holds, it will be the best return for the index in two, and a few points better than its historical average. suzanne pratt, nbr, new york. >> tom: fast food diners dig in to mcdonald's cheddar bacon onion burger in november. still ahead, an update on much stronger sales at the golden arches.
>> susie: christmas is still 15 days away, but fedex predicts today will be its busiest shipping day ever, over 19 million packages. that's more than double the company's typical daily volume, and a 10% jump from last year. today is also known as "green monday," and it kicks off one of the best weeks of the year for online retailers. erika miller reports. >> reporter: if you're wondering why today is called "green monday," its because of all the green changing hands. many of the sales are now online, so stores offer deep discounts to lure shoppers to their sites. the term "green monday" was created by ebay in 2007. it refers to the second monday in december, which is typically
that site's biggest sales day of the year. overall, the season appears to be off to a strong start for merchants. >> i think they planned their inventory wisely. i think they planned their markdowns wisely. so, i think that smart retailers are saying, "we're going to go promote and were going to start early to get some of the momentum, and then we're going to keep going through the holiday." >> reporter: more than $1 billion was spent on last year's green monday, and this year is expected to be even better. but if you haven't even started your holiday shopping, relax. the deadline to send packages with standard shipping by christmas is next monday, december 17, and over 1,200 retailers will be offering free shipping promotions that day. erika miller, nbr, new york. >> tom: more americans bit into a meal from mcdonald's last month. sales of burgers, fries, and shakes in november were much stronger than expected. it's been a difficult year for the restaurant chain, but as diane eastabrook reports, 2013 is looking better. >> reporter: mcdonald's credits its limited offer cheddar bacon onion burger, beverages, and dollar menu for luring more
customers back to stores last month. same-store sales were up 2.4% in november, after falling just shy of 2% in october. that was the first sales decline in a decade. while november was an improvement, the sales gain was a fraction of what mcdonald's did during the same month a year ago. mcdonald's has been facing stiffer competition lately from other fast food chains, and with unemployment still high, some cash-strapped consumers have cut back on fast food. david henkes from the restaurant consulting firm technomic says mcdonald's is just in a funk. he thinks the chain can ring up better sales in the coming months with more specialty items and better marketing. >> so many people are aware of mcdonald's, it's not as though they need the awareness. but sometimes, you need something that drives them in. so, i don't necessarily think you need a portfolio of new products, but you need a new message that inspires going back to mcdonald's again. >> reporter: technomic projects, next year, fast food restaurants will slightly outperform the
overall restaurant industry, with mcdonald's doing a little bit better than its competitors. diane eastabrook, nbr, chicago. >> tom: eight out of every ten mcdonald's restaurants are owned by franchisees. you can learn more about the relationship between branding and restaurant franchises by visiting us at nbr.com just look for the "nbr-u" tab. >> susie: for the second year in a row, parts of the northeast are rebuilding after a hurricane. ruben ramirez reports from new jersey how areas unaccustomed to
major storms are coming to terms with the aftermath. >> reporter: it was a storm the likes of which the new jersey shore had never seen. roads destroyed, property lost, much of the jersey boardwalk washed away, adding up to billions of dollars in losses. karl new is a claims adjuster for insurer american modern, accessing damage of homes, cars and boats. what's the difference between this and what you'd see in the south? >> these houses are a lot bigger. in the south, they're square, one to two stories. south carolina builds for hurricanes. these weren't built for hurricanes. >> reporter: john marchetti lives one block from the beach. >> the car was completely submerged in the garage. it was lifted up and twisted like a washing machine effect. >> reporter: to date, insurers
have processed 60,000 vehicle claims in new jersey alone. the insurance information institute estimates insured losses from sandy will likely run around $19 billion, making it the third costliest natural disaster behind katrina and andrew. >> the cost of living is higher, houses are more expensive, so that's going to inflate our costs all the way around. >> reporter: insured losses are just one part of the equation. uninsured losses will likely run into the tens of billions of dollars. jim beukholt's is the third generation owner of the ben franklin shop. >> we didn't have flood insurance, so we have to take a loss on everything. >> reporter: sandra gerber's vacation home didn't have any flood insurance, either. nearly two feet of water means her recently remodeled home will have to be gutted. >> i don't have flood insurance. i don't have hurricane insurance. i just have the normal fire,
theft liability. >> reporter: but with the high cost to rebuild, where everything from sheet rock to lumber are more expensive, residents worry that two big storms in two years will cause insurance premiums to rise and property values to decline. ruben ramirez, nbr, lavallette, new jersey. >> susie: to hear more from one of the small businesses you saw in ruben's story, go online to nbr.com to watch an extended interview. "right to work" laws were in the spotlight today. president obama criticized them, saying they represent anti-union politics and deprived workers from better wages. the president weighed in on a controversial law pending in michigan's legislature while visiting that detroit engine plant that we mentioned earlier in the program. republican supporters of the measure say it will attract businesses. the measure could be signed into law tomorrow. more developments today on the bankruptcy process at hostess. the maker of twinkies and wonder bread says it needs to borrow
$30 million from its liquidator in order to finish selling off its baking business. hostess says it has received more than 100 inquiries for the rights to its popular snack food brands, but that money from potential sales won't come until spring. well, on wall street investor kos use a little comfort food. stocks have been meandering as investors are waiting on that fiscal cliff as suzanne reported a little earlier in the program. but the good news is that stocks were up, that makes four sessions in a row. >> no sugar rush though in the stock buying today at all here, suzie. let's look at our market focus. it was a quiet day of trading with no economic data and no noteworthy movement on fiscal cliff negotiations. the s&p 500 stuck to a very narrow trading range, just six points from its low point right after the opening bell to its highest level of the session, around 11:00 a.m. eastern time. the index finished up by a fraction. trading volume was light-- 591 million traded on the big
board; just over one and a half billion moved on the nasdaq. the materials sector led the gains, up seven tenths of a percent. the consumer discretionary sector was the biggest drag, falling six tenths of a percent. a couple of metal stocks led the way up for materials. with global demand waning, prices have been soft. cliff's natural resources mines the iron ore used in steel furnaces. shares were up 4.6%. they were at a year-low at the end of last month. specialty metals maker allegheny technologies also picked itself up from its yearly low, rising 3.2% today. travel web sites operator priceline.com hit the brakes in the consumer sector. shares fell 5% to a three-week low. investment bank deutsche banc cut its rating from "buy" to "hold," thinking priceline's competitors will get more aggressive. it was a trio of technology stocks leading the dow jones industrial average, including the worst dow stock so far this year, hewlett-packard.
h-p-q shares closed up 2.6%. cisco systems is at its highest price since early may after gaining 2.4%. and microsoft moved up 1.8%. last week, it was at its lowest price of the year. uncle sam no longer wants to own a.i.g. late today, the treasury department announced it is looking to sell the remaining stock it got when it bailed out the insurance giant. the stock represents 16% of a.i.g. shares were down 2.3% during the regular session and lost another 1.5% in extended hours trading. selling these shares will mean the government made a profit with its bailout. after this stock sale, the government will continue to own warrants, allowing it to buy a.i.g. stock if it chooses. separately, a.i.g. announced it will sell almost all of its aircraft leasing business to a group of chinese companies for $4.8 billion. that's much less than what a.i.g. wanted. it is a different kind of deal for conglomerate ingersoll-rand. it will spin off its locks
business, with names schlage and kryptonite, something active shareholders have been calling for. i-r shares fell 1.9%. four of the five most actively traded exchange traded products were up. the financial e.t.f. fell two tenths of a percent. and that's tonight's "market focus." >> tom: could wall street be turning on apple? not only is the stock one of the most widely owned, it also is almost universally loved by analysts. but the stock has dropped more
than 20% in less than three months. tonight's "word on the street" is "apple." lindsey bell is an investment analyst with thestreet.com. lindsay, how would you describe the characteristics of the sell-off we've seen since september in apple? >> the sell-off in the last week alone down 9% is the worst that we've seen in two and a half years in this stock. i think it can be described in a couple different ways. one is that there are concerns about iphone sales for the current quarter and the march quarter. there is some supply issues there. another issue is there has been a technical breakdown in the stock which basically that just means that the historical trend in the stock has changed in such a way that it's triggered some selling here as investors sentiment on the stock has changed. and third i think you have to actually consider the stock is still up 30% year to date. there are some people booking a profit ahead of a change in tax codes here at the end of the year. >> i want to focus on the fundamentals though. that first reason you mentioned. how significant are those fundamental concerns. in other words, how much of the company's business is
truly being questioned here? >> there sure are some supply issues in the iphone for certain but i still think that the company's going to be able to meet analyst estimates of 45 million iphones to be sold this quarter. i think we can also see upside from the number of ipad minies that are sold this quarter. we'll have to keep an eye on what margins look like from those. but i think that the quarter could be good but we're not going to get that until the end of january. >> i have to ask you about apple shares here. you mentioned thesu& just in thegx6a
and the sentiment on the stock really is negative which usually means it's time to get in. and longer-term the fundamentals are there. yes, there's no catalyst nearterm but next year we will have a new iteration iphone 5 which could come in june or july which is earlier than we've seen in the past. it usually comes in september. the itv should be out for next holiday season. this is a consumer crowd pleaser. i think one has more upside in the future for sure. >> just 30 seconds left but i have to ask you about analyst sentiment. today investment bank jeffries cut its target price from 900 to 800. do you think more will come on to that bus, that negative butts? >> listen, you know whack, i think you look at on bloomberg survey analyst 8 a% of them still rate the stock a buy. i think analysts right now are trying to fundamentally describe why the stock is down so much here. >> do you own any shares of apple yourself? >> i do not. >> lindsey bell with us with word on the street from thestreet.com. >> susie: tomorrow on nbr, ever wonder what goes into making those cardboard store displays? a look at how one box company is reinventing itself.
a common concern from american businesses these days is how to deal with the repercussions from the fiscal cliff. that's the message we heard from the c.e.o.s of three successful companies in different businesses. one builds web sites and mobile apps, one contracts with the federal government, and one makes meat snacks like jerky and hot dogs. collectively, they created more than 1,500 jobs over the last three years, and they just won "hire power" awards from "inc" magazine. but all three of them told sylvia hall they're worried the fiscal cliff could make it much harder to succeed. >> the uncertainty, the unknown,
we make 45 million of those sticks >> you work with the federal government. we do have our business affected by it, still 7% which is not insignificant. >> explain exactly how you have been able to position yourself to work with the federal government but still be a mune to cuts. >> the fee-for-service kind of model, so in the money that we collect, which is about 1.2 billion dollars a
year in the centers that we support, funds the work that we do. >> mike, your industry is growing quickly, could you please explain to me where the fiscal cliff comes in for you and how it's affecting your decisions if at all. >> for me it's much more about the uncertainty, once again. you know, whether we go over the cliff, whether we don't, i think those are, those things are important and obviously there's far reaching implication but for us, again, we just are looking for an understanding of what is going to happen on a level playing field so we can make decisions. >> the clive cliff right now s it changing your decisions or affecting your business decisions? >> frankly, whatever hand i get dealt by the fiscal cliff, whether it's good or bad i'm going to figure out how to play and how to push forward. and so i think that the uncertainty that it is creating is making me worry about my decisions a little bit more but i'm not sure, i don't think i'm actually changing anything. >> congress is mailing out a deal and trying to come up with a solution for this.
what could they do that would actually help you right now? what's the best outcome that could come from this? >> i am just hoping for a deal. i think that if we have a deal there will be more confidence, there will be more certainty. and i could envision another robust economy. and that's what we all want. >> we need to come up with a plan that we all can agree to and be willing to give up a little bit in order to gain a lot. >> i agree with both of you guys. i think the worst thing that can happen, the worst decision would be no decision at all. >> thank you a soul-- all some of. i appreciate your time. >> thank you. >> thank you. i was talking to some leaders at an event in new york today and it was just a repeat of this conversation. there were bigger companies but saying the same thing that we'll figure out how to deal with whatever we're dealt with in this fiscal cliff. but they're really not happy with the whole situation. >> yeah, just looking for a plan. looking for isn't. not taking sides, just as one just said, hoping for a deal before the enof the year. >> exactly.
they know it's going to be tough but they said they'll deal with it. that's "nightly business report" for monday, december 10. have a great evening, everyone, and you too, tom. >> tom: good night, susie. we'll see you online at nbr.com, and back here tomorrow night. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org >> join us anytime at nbr.com. there, you'll find full episodes of the program, complete show transcripts and all the market stats. also follows us on our facebook
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